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Labour Markets and Productivity in Developing Countries

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  • Mathan Satchi

    ()

  • Jonathan Temple

Abstract

In middle-income countries, the informal sector often accountes for a substantial fraction of the urban labour force. We develop a general equilibrium model with matching frictions in the urban labour market, the possibility of self-employment in the informal sector, and scope for rural-urban migration. We investigate the effects of different types of growth on wages and the informal sector, and the extent to which labour market institutions can influence aggregate productivity. We quantify these effects by calibrating the model to data for Mexico.

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Bibliographic Info

Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0805.

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Date of creation: Feb 2008
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Handle: RePEc:ukc:ukcedp:0805

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/

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Keywords: informal sector; urban unemployment; dual economies; matching frictions;

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